Subjects

Saturday, April 30, 2016

HB 689: A Graduated Tax Plan for Illinois?

Reprise:My very
wealthy Republican friend Ernesto stops by on occasion to say hello and to
school me on the indolence of the underserving masses.This conversation posted in 2014 might well
have been posted yesterday. Rep. Lou Lang’s IL HB 689 has provided Illinois a
possibility to move beyond an antiquated and injurious flat tax.Part of the fallacious and emotional arguments presented by opposing forces like the Governor is found in my talk with Ernesto.

Nothing better than this?

Graduated or
Gradient? – Looking for Accuracy in a Fair Tax for Illinois

“This season affects me most –
psychologically,” my wealthy friend Ernesto uttered between sips of cognac
the other evening.

“It has been a brutal winter, Ernesto,” I
offered hopefully, “but the end is coming with each day’s increasing sunlight.”

“I am talking taxes, my friend,” Ernesto responded, glowering.“I am
imprisoned by your government’s exasperating 33% income tax.And, I suppose, you are now part of that
progressive rabble that wishes the same - a graduated income tax in Illinois?”

“Goodness, Ernesto.Thirty-three percent indicates a significant
income.I am happy for your
success.May I ask what portion of your
income is subject to this rate?”

“Why, all of it…just as you and your union
bosses would wish in Illinois.”

“Actually, Ernesto, if Illinois were ever to
move to a “Fair” tax system, one you would call progressive or graduated, the
increases in taxation would occur as they do on the federal level – at thresholds
or gradients.In other words, Ernesto,
if you achieve $3000 above the threshold for 33% taxation (which is $226,850),
you pay 33% on that $3000, not your entire earnings.

“In fact, Ernesto, you pay your federal tax
like everyone else for all of our services for each of the thresholds as you
move through them, my friend.That means
you pay only 10% on your first $18,000, 15% on your next $56,000, 25% on your
next $75,000, and so on.You don’t fall
into a category where you pay 33% for all of your earnings.That’s why I use the term gradient tax system
(or fair tax) rather than graduated when I talk about it. “

“You don’t know my pain…”

“In truth, Ernesto, you pay the same
percentage tax as me until you move well beyond me…and then you pay extra for
only those amounts above our joint threshold.”

“I see.Don’t you have anything better than Hennessey?Paul Ferrand or Skye?”

“Sorry, no.And that is how a fair tax would work in Illinois, Ernesto.We, both of us, would be taxed at higher levels
for the amounts we earned above thresholds of income, not for all of it.”

“Ahhh, my friend.But you’re still stealing from me for being
successful, are you not?”

“Well, not actually, Ernesto.In truth, you and I might actually be
stealing from the greater population in Illinois who pay more dearly for their
services – education, protection, healthcare, roads and transportation – than
we ever will.And, if we’re not
stealing, we’re certainly getting a better deal for it all.”

“Ridiculous.”

“Not so, Ernesto.The average earner in Illinois pulls in
$47,485 annually.At 33%, I know that
you pull in much more, and I’d venture nearly ten times that amount.Nevertheless and without denial, let’s review
our numbers.Suppose Mr. Average needs a
new car for his family and purchases a solid sedan at $25,000.I see by your scowl that such a concept is
impossible.Will you accept $40,000? “

“Only if I have to…”

The taxes on this family’s precious purchase
will be several – New Vehicle Tax, Cook County Home Rule Tax, Cook County Sales
Tax, possible Chicago Home Rule Tax…and others.Those taxes, Ernesto will run to nearly $3,000 – or almost 7% of the
earner’s annual salary. “

"Stay poor, my friend"

“And…?”

“For an income earner like you?A mere .6% of your salary.Ernesto,
you would need to purchase at least ten of these vehicles to begin to feel that
same impact on your income.That is
something, I might add, you would not and never need do.But it does illustrate a significant
difference in our relationship with tax requirements, doesn’t it?We gest away with a lot, my friend.

“Add to your and my advantages the costs of
milk, gasoline, clothing.Costs of
living and taxes for these average workers, Ernesto, drain huge portions of their
ability to live, and we are not talking disposable income.

“Indeed, what you and I pay for the
protection of police and fire, for our schools, for transportation, health services,
and other benefits is a steal, Ernesto.Don’t we owe it to make it more even?”

About Me

I am a retiree, political activist, social advocate and community volunteer. I taught at Lyons Township High School in LaGrange for 34 years in the Language Arts classroom and worked as an administrator for several years. My current avocations include various community outreach and assistance programs. Having benefitted from employment in a collegial, reflective teaching environment that encouraged dedication and professionalism, I continue to seek the promotion of education at all levels as a long-term effort combining talent, perseverance, commitment, and constant professional growth - not a blind adherence to a business model of measured production.

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